Syria doubts drive up oil, yen; stocks fall


LONDON — Uncertainty about the possibility of military action against the Syrian government lifted oil towards a five-month high yesterday, undercut world share prices and drove demand for safe-haven assets like the yen.

Report by Reuters

Emerging markets were hit hard again as doubts over the Syrian situation added to pressure coming from investors’ positioning for an end to the availability of cheap dollars which has helped support many developing nations.

Dealers said the move into safe-haven assets, spurred by reports from Washington that a strike may be imminent, were not on a huge scale as investors are waiting to see how the situation unfolds.

“Certainly there hasn’t been any panic but with the headlines out there, there has been some risk-off trading,” Greg Matwejev, director of FX Hedge Fund Sales and Trading at Newedge, said.

US Secretary of State John Kerry, in the most forceful reaction yet to the August 21 gas attack outside Damascus, set the stage for possible action when he said President Barack Obama “believes there must be accountability for those who would use the world’s most heinous weapons against the world’s most vulnerable people”.

Kerry said Obama was consulting with allies before he decides on how to respond and those comments saw US stocks SPX end 0,4% lower in light volumes on Monday.

The Wall Street sell-off started the move into safer assets with the yen rising broadly to leave the greenback down 0,4% at 98,07 yen and the Australian dollar down 0,8% to 88,25 yen.

The euro had fallen 0,3% against the Japanese unit though it was steady against the dollar at $1,3372.

Meanwhile, Russia’s rouble was up 0,2% against the dollar at 33,14, but down 0,4% versus the euro to 44,34 to be at an early September 2009 low of 38,19 versus its dollar-euro basket which is used by the central bank to gauge market interventions.

Russia is Syria’s key ally and arms supplier, and has urged Washington not to use military force against President Bashar al-Assad’s government.

Traders said Russia’s response to any US move against Syria would be key to whether the current shift into safer assets turned into a major flood.

In the oil markets the tension over Syria has added to ongoing worries and other nations in the Middle East, which pumps a third of the world’s oil.

Brent crude oil for October last year was over $111 a barrel, though just under Monday’s high of $111,68, which was its highest price since April 2.